America's Most Expensive ZIP Codes

It's been a troubling year for Florida's homeowners. Many have seen their property values plummet--and there is no bottom in sight.

Prices dropped by 20% in Miami, 18% in Tampa and 17% in Orlando over the past year, according to the National Association of Realtors, and the Sunshine State ranks at the top of the national foreclosure heap, along with Michigan and California. The troubling news on the horizon: a new round of Option ARM loans next year will reset.

But for residents of Fisher Island, Fla.,--a small community (pop. 475) of ritzy condos and sprawling homes and famous for its Vanderbilt mansion as well as its golf, tennis and yachting clubs--it's been a pretty good year. Prices on the island, which sits in the Miami Beach archipelago, rose by $525,000 over the last year, making 33109 the most expensive ZIP code in America with a median home sale of $3.85 million.

They're not alone. Most of the ZIP codes on our list saw strong price appreciation. Location is behind some climbs. There just aren't that many beach-front lots in Santa Monica, Calif., (90402) or Nantucket, Mass., (02554), and as long as there's money in tech, the Los Altos (94024) and Los Gatos (95030) hills above Silicon Valley are going to command top dollar. In a year when most conventional wisdom about real estate has been proved wrong, the well-worn notion that the luxury sector is resistant to national slowing has held.

Behind the Numbers

California owns our list, posting half of the top 500 ZIPs. There are the perennial listings like Ross, Calif., (94957) and Atherton, Calif., (94027) and the famous Beverly Hills neighborhoods of 90210, 90212 and 90211 and some cities that have been hammered by home price declines. In Rancho Santa Fe (92067), a well-heeled suburb of San Diego, home prices fell by $225,000 last year, a loss that's bigger than the average home value in America. In sum, 40% of the California ZIP codes on our list saw price declines, compared to 30% for the non-California ZIPs.

How a prolonged decline in the finance sector will affect next year's list is unknown, but there's already been slowing in prime areas around New York that depend on Wall Street cash. Amagansett (11930), on Long Island, home to mansions, sailboats and big cars, fell $375,000 this year to $1.675 million. Great Neck, N.Y., (11024)--the model for F. Scott Fitzgerald's The Great Gatsby--on the landed North Shore, dropped $310,000 last year to $1.03 million.

The Midwest's characteristic steadiness kept many of its prime neighborhoods from fading. Lake Forest Ill., (60045) appreciated by $88,750, while Hinsdale, Ill., jumped $188,500. Of course, the cities have fairly small populations at 20,000 and 17,000, respectively, something that helped performance on this year's list as bigger ZIP codes and cities were prone to more variation.

Size plays an important role. The ZIPs on our list are not pegged to neighborhoods or populations like Congressional districts, but to a series of logistical decisions on how to distribute mail. They are the descendants of the 1943 Postal Service's Zone Improvement Plan to deliver mail more efficiently. As a result, dense cities under-perform on our list.

While New Yorkers wouldn't conflate the Upper East Side with Yorkville or parts of SoHo with TriBeCa, the Postal Service makes no distinction in either case. Consider New York Giants' owner Jonathan Tisch, who paid a record $48 million for an East 67th Street co-op in the 10065 ZIP. It's impossible to find anything in that neighborhood, near Central Park, for less than a few million dollars, yet the Upper East Side doesn't figure very well on our list.

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That's because there are also plenty of studio apartments near the 59th Street Bridge or on Second Avenue that sell for $350,000 or $450,000 in 10065. Since these areas are measured on median price, a large number of cheap sales drive down the ZIP code's ranking.

Unlike those Manhattan neighborhoods, which posted price gains for the year, many pricey neighborhoods didn't stay above the national fray. Rich areas like La Jolla, Calif., (92037) seem to have everything going for them: beaches, sunshine, beautiful homes and high-end shops, but there are scads of foreclosures lurking, as some homeowners took on more debt than they could handle.

With 158 foreclosures in La Jolla and 64 in Malibu, not to mention 57 in the prime New York City suburb of Scarsdale, you might have the opportunity to join our rich property fraternity quite soon.